Shareholder Class Action Defense
The impact of COVID-19 continues to evolve, yet we already have seen securities class actions and regulatory activity regarding the pandemic. As with previous economic downturns, we are likely to see a continuing rise in the number of securities class actions, stockholder derivative suits, and regulatory activity over company representations concerning the outbreak on a business’s performance, the adequacy of risk disclosures of COVID-19 on the business, compliance with government required or recommended protocols, or the company’s own policies, or mitigation efforts concerning the virus. These actions may be filed even long after the pandemic subsides when stockholders “discover” the basis for suit. As companies grapple with challenging decisions for their businesses, this remains a crucial time to remain vigilant and committed to fulsome public reporting addressing the current impacts of COVID-19 and expected continuing risks of the pandemic to the business, all the while adhering to corporate governance best practices in company decision making. Reviewing company insurance policies, indemnification, and advancement obligations also may be a prudent step for a complete picture of the company’s risks.
Jason de Bretteville
, chair of Stradling’s White Collar Criminal Defense
practice group and co-chair of the firm’s Enforcement Defense & Investigations practice group, was quoted by Westlaw Journal
regarding the Supreme Court’s decision in Cyan Inc. et al. v. Beaver County Employees Retirement Fund et al
, a class action lawsuit alleging that the telecommunications systems supplier misrepresented its sales figures before its IPO. The Supreme Court unanimously agreed that “state courts have concurrent jurisdiction with federal courts over class-action lawsuits that only allege violations of the Securities Act of 1933.”